'Perfect storm' turns Lehigh County into beverage mecca

APRIL BARTHOLOMEW, THE MORNING CALL

Trucks drive near Schantz Rd. and Rt. 100. The Lehigh Vallley's location, workforce and oddly enough access to tons of water make it a good place for a beverage hub. An already established major food and beverage cluster in one place attracts more companies. Most of the cluster is in western Lehigh County in Upper Macungie Township, where available land and facilities have been conducive to continued growth.

Trucks drive near Schantz Rd. and Rt. 100. The Lehigh Vallley's location, workforce and oddly enough access to tons of water make it a good place for a beverage hub. An already established major food and beverage cluster in one place attracts more companies. Most of the cluster is in western Lehigh County in Upper Macungie Township, where available land and facilities have been conducive to continued growth. (APRIL BARTHOLOMEW, THE MORNING CALL)

When Lehigh County Authority took the unusual step of restricting water use in western Lehigh County in 2009, the announcement came with a caveat that rankled some customers: the summertime rules did not apply to industrial users.

The exception for companies like Boston Beer, Nestle Waters, Niagara Bottling Co. and Coca-Cola illustrated the significance of a water-reliant beverage-making mecca in Upper Macungie Township that has helped feed the Lehigh Valley economy with jobs and tax dollars.

LCA officials at the time said they didn't want to infringe on the livelihood of workers by placing restrictions on production at those plants. The move underscored the need to preserve what has become one of the Lehigh Valley's economic hubs.

Beginning in the 1970s, the area near Route 100 also has grown to include juice-maker Ocean Spray, in addition to food manufacturers that include Kraft Foods, Bimbo Bakeries and the A.L. Bazzini nut-roasting plant.

The industrial users in that area combined employ about 1,700 workers and pay about $2 million in property taxes, about $1.5 million of which goes to the Parkland School District.

In addition to lessening the tax burden on residential property owners in Upper Macungie and the Parkland School District, those companies also helped keep LCA water and sewer rates more stable than they otherwise could have been during the recession.

The economic growth — there is still room for more — came about because of ideal circumstances for such corporations: a plentiful supply of water, access to major highways such as Interstate 78 and Route 22, proximity to cities along the East Coast and millions of dollars in grants and low-interest loans handed out by the state to lure companies to Pennsylvania and help fund expansions to keep them there.

"Those factors together created this perfect storm for food and beverage production," said Don Cunningham, president and CEO of Lehigh Valley Economic Development Corp.

"When you add it all up, it's kind of at the right place at the right time and it's worked out well for us," said Tony Iannelli, CEO of the Greater Lehigh Valley Chamber of Commerce.

Cunningham noted the level of water and sewer services LCA can provide has been key to development.

The major beverage companies — Boston Beer, Coke, Nestle, Niagara and Ocean Spray — account for 35 to 40 percent of Lehigh County Authority's sales of water, which is drawn from springs and the Little Lehigh Creek. Combined, those beverage companies use about 2.3 billion gallons of water annually, according to authority figures.

Perhaps more importantly, Cunningham said, LCA provides a crucial wastewater pretreatment plant that makes the land in Upper Macungie more valuable. One reason Ocean Spray decided to move its operation to western Lehigh County last year was the existence of the plant, which allows for industrial wastewater to be treated down to residential waste potency before it is sent to the treatment plant at Kline's Island in Allentown, which can't handle industrial waste.

Without that pretreatment plant, near Route 100 in Upper Macungie north of the Route 222 bypass, Ocean Spray, one of the more-recent additions to the industrial zone, would have had to spend millions building its own.

The transformation of that part of Lehigh County wouldn't have occurred had it not been for a controversial move back in the 1960s to bring water and sewer services to areas that were undeveloped.

At a time when discussions among multiple municipalities about a regional water and wastewater system failed, Schaefer brewery and Kraft Foods were looking to move into the region, according to Aurel Arndt, LCA's chief executive officer. Seeing an opportunity, Lehigh County officials pushed for a regional authority that was created in 1966. By 1970, agreements were in place to bring both Schaefer and Kraft to the Lehigh Valley.

Eventually, four wells were drilled to provide the water service needed, but "it became apparent that the Allentown [sewage] treatment plant would not be able to handle the waste," Arndt said. There was an immediate push to create a pretreatment plant that would dilute what was transported to Allentown.

As the authority has grown, so too has activity in and around the area of Route 100 and Interstate 78. Consider:

•In 2008 Boston Beer brought beer brewing back to Upper Macungie in the former Schaefer brewery at Routes 78 and 100, ending a roughly seven-year period during which beer wasn't brewed there. It subsequently spent millions to increase capacity at the plant. The number of its employees increased from 220 to 260 at the time of the expansion.

•In 2013, Coca-Cola announced it was expanding its Upper Macungie plant, originally opened in 1997, to produce more noncarbonated drinks, such as Powerade, Vitaminwater and Fuze, an expansion that included 28 more employees that brought total staffing to 158. It was the second expansion in two years. The company received $1.25 million for the first expansion, $66,000 for the second.

•Ocean Spray last year opened a $100 million plant at Schantz Road and Route 100 with about 180 employees. The state offered Ocean Spray $4.5 million in incentives.

•Bimbo Bakeries last year opened a $75 million baking plant and is expected to employ about 180 people.

"We were always told by developers and people seeking out places to put businesses that it was our location," said Upper Macungie Township Supervisor Kathy Rader. "We're right here by I-78, which will take you pretty much to New York and New Jersey."

Cunningham said the number of companies operating in Upper Macungie has increased partly because of the "comfortability" factor. They see that similar companies have thrived there, taking out of the equation much of the guessing over whether it's a suitable site.

Cunningham and Arndt said they're unaware of any companies scouting the area to potentially join the beverage companies in Upper Macungie, but they said room still exists for some growth.